Avoid Making a Simple, but Detrimental Mistake!
Q: When are Directors’ wages not Directors wages?
A: When they are expenses of course.
Except when the taxman is around. Now, if a Director is paid money, and it’s not nailed down what that money is, then tax is being demanded on it. If you don’t do this method:
- €4,000 fine to the Director
- €3,000 fine to the Company Secretary
- A director is in receipt of payments from a company amounting to €36,000 annually, which were paid monthly. The company state that the payments are “payments on account” to cover travel and subsistence, payments made by the director on behalf of the company, director’s loan payments and remuneration.
- They reconcile the director’s current account at the end of the year when preparing the annual accounts. As these payments are made to the director in his or her capacity as an office holder, deductions under the PAYE system must be made by the company on the making of the payments.
- For directors’ wages, the company acting as the employer is responsible for operating PAYE and deducting the appropriate taxes from the director’s salary. This includes deducting income tax under the PAYE system and any National Insurance contributions that apply.
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Additional information regarding Directors here!